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The French government teetered on the brink of collapse on Monday as Prime Minister Michel Barnier challenged a fractious parliament to topple his administration over tax and spending plans.
Barnier’s left and right opposition parties said on Monday they would vote to remove his minority government after he vowed to force through draft budget measures without approval. of parliament.
The political crisis has prevailed France comes just weeks after the collapse of Olaf Scholz’s German coalition, leaving the EU’s two most powerful countries in limbo.
“We have arrived at the moment of truth,” Barnier said on Monday. “Members of Congress must now decide if our country will receive a responsible, indispensable budget or if we will enter uncharted territory.”
In an effort to push through part of a 60 billion euro package of tax increases and spending cuts, he triggered article 49.3 of the French constitution, which allows the government to bypass parliament to pass laws, but only if it has can exist in a state of distrust. vote.
Immediately after the move, Marine Le Pen confirmed that her far-right National Rassemblement party would vote to remove Barnier, while far-left party France Unbowed also said it would submit a motion of no confidence.
If Barnier’s government fails in such a vote, which could come as early as Wednesday, it would make him the shortest-serving prime minister in France since the Republic. Thursday was founded in 1958.
Emmanuel Macron appointed Barnier to the post in September, after the president’s gamble in the summer election backfired, leaving his own centrist coalition short of a majority in Parliament.
Macron will have to appoint another prime minister if the no-confidence motion is successful, as the next parliamentary elections will not be held until 12 months after the July election.
“Investors worry that France will lose direction if the government falls into difficulty.” [a] vote of no confidence,” said Chris Turner, head of global markets at ING. He added that the move was “adding to instability in the eurozone”.
France’s bond market has been hit by political unrest over the past two weeks, with borrowing costs rising almost as much as Greece’s. On Monday, they weakened after Barnier’s move, pushing the closely watched 10-year bond yield spread over German yields to 0.87 percentage points, close to a 12-year high recently.
The euro continued to weaken ahead of the crisis, down 0.8% against the dollar at $1.048 in the early evening, while French stocks ended the trading day unchanged.
Le Pen criticized Barnier for not listening to her party’s demands to protect French citizens from social security measures that she said would erode their purchasing power.
“The French have had enough,” she said. “Maybe they thought things would be better with Michel Barnier, but in reality they were even worse.”
Barnier was caught up in final negotiations on Monday over a financial package with Le Pen. The fate of Barnier’s budget and government remains largely in Le Pen’s hands. RN because it is the largest single party and an important swing voting bloc in parliament.
But the negotiations were fruitless, even though Barnier gave in to two-thirds of the RN’s demands.
“Essentially, the game is over for Barnier,” said Mujtaba Rahman of Eurasia Group. “France is about to enter its second serious crisis in five months.”
